25th January (Issue 331)

Welcome to the Origin Capital Weekly Irish Property Review. This update is designed to provide you with a full recap of the latest property news from the media over the last seven days.

OFFICE

Sir John Rogerson’s Quay, Dublin Just seven weeks on from its formal agreement to lease the entire 202,000 sq. ft. at the Sorting Office, TikTok is understood to be in talks to rent both the 177,000 sq. ft. of office space at Marlet Property Group’s Shipping Office scheme and the 80,000 sq. ft. available at Iput’s Tropical Fruit Warehouse. Should deals be agreed for the two properties, their combined 257,000 sq. ft. of office accommodation would give TikTok the capacity to add c. 2,500 workers to the 2,000 people it will be able to accommodate at the Sorting Office. Although heads of terms have yet to be agreed between the various parties, deals for the Shipping Office and Tropical Fruit Warehouse would give TikTok’s Irish operations an overall footprint of 459,000 sq. ft. across three office buildings. The Sorting Office is situated on Cardiff Lane while the Shipping Office and Tropical Fruit Warehouse are located on either side of it on Sir John Rogerson’s Quay. The Irish Times, 19^th January

Blackrock, South Dublin Temple House has come to the market in Blackrock, south Dublin, seeking €9.75m. The landmark five-storey office building was built in the 1980s and sits on an island site occupied by two office buildings. The offices, which extend to 29,697 sq. ft. on a net internal floor area basis are fully let to various occupiers including Irish Life and Sodexo and include 65 designated undercroft car parking spaces. With a current passing rent at €920k a year, the asking price of €9.75m will provide an initial yield of 8.58% to an incoming purchaser. The weighted average unexpired lease term is 5.54 years and including tenant break options is 2.93 years. The Irish Times, 19^th January
For lending terms on this asset please contact rossmetcalfe@origincapital.ie

Nutley and AIG Buildings, South Dublin Pan European investor and asset manager M7 Real Estate has paid just under €15m for two office blocks in south Dublin. Developed in the late 1980s as part of the wider Merrion Shopping Centre scheme, the Nutley and AIG buildings comprise an overall floor area of 43,235 sq. ft. along with 83 undercroft car parking spaces. The subject property is currently generating total rental income of €1.44m a year. The Nutley Building is let to a number of occupiers including Bonkers Money, the Japanese Embassy, the Austrian Embassy and Global Standards while the AIG Building is let to a single tenant with a number of sub leases in place. Commercial real estate consultants Bannon handled the sale. Following its latest purchase, M7’s Irish portfolio now comprises 18 assets extending to just under 1.1m sq. ft., primarily in industrial and logistics space. M7 operates across 14 countries and manages a portfolio of c. 835 retail, office and industrial assets with a value of c. €5.1bn. The Irish Times, 19^th January

MIXED

Blarney Business Park, North Cork JCD Group has confirmed Park Place Technologies and FedEx as the two latest companies to establish operations at Blarney Business Park, the 70-acre campus located just north of Cork city on the Cork/Limerick N20. Park Place Technologies, a US multinational company, moved into its new custom-built 25,004 sq. ft. building in September 2021. The building has been built to LEED Silver standard and is fitted out with a large section of office space, data centre and equipment testing labs, Network Operations Centre, and a warehouse/shipping area. It has also been confirmed that FedEx has agreed to lease a new 50,000 sq. ft. building, which is also being built to LEED standard. The building will feature ten dock levellers, an ancillary two-storey office block, and yard and circulation areas. Since acquiring Blarney Business Park in 2018, JCD Group has invested significantly and completed c. 250,000 sq. ft. of new industrial/office space. Other occupiers in the recently completed buildings include ILC Dover, GLS, DHL and US essential oils manufacturer DoTerra. The Business Post, 23^rd January

RETAIL

Adamstown, West Dublin Aldi has signed a lease for a 23,000 sq. ft. store at The Crossings, where it will join Tesco and other retailers as part of a €500m development by Quintain. Construction on the Aldi store has commenced and it is expected that both the Aldi and Tesco stores will be completed in early 2023. The Crossings is a new development which commenced construction last year. Phase 1 of the development includes 279 BTR apartments, a further 20 retail units and five restaurant outlets, along with a multistorey car park. Planning permission for a second phase of 185 apartments has been granted and further phases are planned for submission. Over the next four to five years, Quintain is aiming to build c. 1,000 residential units at The Crossings, mostly apartments and duplexes, with a very small number of houses. The development will also include a two-acre village green. The Irish Times, 19^th January

HEALTHCARE / NURSING HOME

Sandyford, Dublin 18 The Beacon Hospital has secured permission for a €75m, eight-storey extension. Dun Laoghaire Rathdown County Council has given the go-ahead for the 70-bed extension at the facility in Sandyford, Dublin. The scheme also includes new A&E facilities, cancer care provision and associated inpatient treatment rooms. The planning application involves the substantive demolition of the Beacon Hotel, purchased in late 2020 from the MHL Collection hotel group. The local authority found that the hospital extension did not detract from the amenities of the area and was consistent with the provisions of the Dun Laoghaire Rathdown County Development Plan. The council granted permission despite a comprehensive group objection lodged by the 70 owners and tenants of the Beacon One apartment complex. Outlining the need for the development, planning consultants for the hospital stated that it had undergone significant exponential growth, particularly in the past seven years, due to the increase in demand for its services. The Irish Times, 24^th January

RESIDENTIAL / DEVELOPMENT

Social Housing Fund, Ireland Asset manager Gresham House Ireland has announced a new €100m social housing fund for credit unions. The Gresham House Credit Union Income Fund, which has been approved by the Central Bank of Ireland, will finance the acquisition and construction of between 350 and 450 homes throughout the State over the next two years. Gresham House said it intends to raise capital from the State’s 200-plus credit unions with those unions who invest members’ savings in the fund earning income from the portfolio. With the loans amortising over periods of up to 25 years, Gresham said the portfolio “will create a stable long-term income stream and a gradual return of the original investment.” The Irish Times, 21^st January

Clyde Lane, Dublin 4 Residents are seeking to halt plans for a 64-unit BTR apartment scheme for Clyde Lane, which runs behind Herbert Park in Ballsbridge, Dublin 4. Last month, DCC granted planning permission to Pembroke Partnership for the scheme at St Mary’s Home, Pembroke Park and 28A Clyde Lane despite strong local opposition. Seven separate appeals have now been lodged by local residents to An Bord Pleanála against the grant of permission for the scheme – which will include 41 one-bedroom apartments, 19 studios and four two-bedroom apartments. The scheme involves the repurposing of St Mary’s Home, a nursing home, to contain 23 units and the construction of three new buildings that will provide a combined 41 apartments. The Irish Times, 20^th January

Housebuilding, Ireland There was a sharp recovery in housebuilding activity last year as developers notified State officials of the start in construction of c. 31,000 homes, a rise of 42% over 2020. The Department of Housing has released details about the latest monthly batch of commencement notices, formal notices given by builders to local authorities of the number of units being built that are sent two-to-four weeks before construction begins. The numbers for December show notices for 1,736 new homes, up 12% on the same month in 2020. Overall for 2021, the number of housing starts notified to the State rose to 30,724, compared to 21,686 the previous year. The 2021 total for housing starts was more than 17% ahead of 2019. The scaling up of housebuilding activity in recent years is underlined by the fact that the total for 2021 was 3.5 times the total for 2015. The latest figures show that c. 11,000 of last year’s new housing starts, or 35% of the total, were in the four Dublin local authority areas. The capital’s hinterland also recorded heavy activity, with more than 1,500 in Wicklow, 2,005 in Meath and 3,165 in Kildare. There were c. 3,100 new housing starts notified for Cork city and county, the next biggest bloc. The Irish Times, 19^th January

Dundrum, Dublin 16 An Bord Pleanála has told Hammerson, the owner of Dundrum Town Centre, that its plans to build 889 apartments in Dundrum require further consideration or amendment. The pre-planning consultation involved planners from An Bord Pleanála examining the Hammerson scheme in consultation with planners from Dún Laoghaire-Rathdown County Council. At the end of this stage of the process, the board either advises prospective applicants if their scheme forms a reasonable basis for a Strategic Housing Development (SHD) application or requires further amendment or consideration. It is now open to the Hammerson company to tweak its plans following the advice from An Bord Pleanála and lodge the fast-track planning application under the SHD system, which will deliver a decision after 16 weeks. The Irish Times, 19^th January

SHD Applications, Dublin 17 and Blackrock An Bord Pleanála has told Gerald Gannon Properties that the company’s plans for 2,718 residential units at Belcamp Hall, Malahide Road, Belcamp, Dublin 17 require further consideration or amendment. The Gannon scheme is comprised of 2,233 apartments, 485 houses, two creches and associated works. With the pre-planning consultation complete with An Bord Pleanála, the company can now proceed to lodge its SHD scheme for the site. In a different SHD lodged with An Bord Pleanála in recent days, Kennedy Wilson entity, KW PRS ICAV has sought permission to construct 102 BTR apartments at lands adjacent to The Grange, Brewery Road and Stillorgan Road, Stillorgan, Blackrock. The apartments will be contained within one apartment block rising to 10 storeys. The 102 units will bring to 895 the number of units for the overall Grange site. Planning consultants for the scheme Brock McClure said Kennedy Wilson owns and operates more than 2,500 apartments in Ireland with a further 1,000 units currently under construction. A decision is due on the Kennedy Wilson SHD application on May 3^rd. The Irish Times, 19^th January

Cork Street, Dublin 8 A joint venture between Irish developer Grayling Properties and European private equity investor Crossroads Real Estate has paid €27.5m for a site in Dublin city centre with full planning permission for a major co-living scheme. The figure represents a premium of 10% on the €25m joint agents Colliers and Cushman & Wakefield had been seeking when they offered the site for sale last September. The €27.5m sale paid breaks back at €72,750 per bedspace. Grayling Properties will be free to proceed with the development of the Cork Street site as the planning application for it predated the formal introduction of ban on co-living schemes. Approval for the scheme was granted at the end of 2020, with a direction from An Bord Pleanála that the number of units be reduced by 19. The development comprises 378 bed spaces across 373 units ranging in size from 183 to 388 sq. ft. within a seven-storey structure. It also includes amenities like reception area, communal lounge/social room, etc. There is also a plan for a cafe, which could be separated from the co-living space, as well as 14,380 sq. ft. of additional space on the lower ground-floor level. The Irish Times, 19^th January

Bearna, Co Galway A residential development site in the coastal village of Bearna, Co Galway, is being offered for sale with a €4m guide price. Extending to 4.58 acres, it comes with planning permission for 40 residential units. Its planning permission will allow a mix of houses and apartments, including 22 semi-detached and terraced houses ranging in sizes from 1,205 to 1,400 sq. ft., on 2.8 acres. The other 1.6 acres of the site is zoned R2 under the County Development Plan, which requires that 50% of the permitted scheme is committed to development before it can receive planning permission. Agents CBRE are selling on the instructions of receiver Myles Kirby of Kirby Healy. The Irish Independent, 20^th January

Fermoy, East County Cork A 14-acre development land plot in north Cork’s Fermoy comes to the open market with agents Savills, with a price guide in excess of €2.85m. The unencumbered town centre site comes to the open market with the benefit of planning permission. Savills describe the topography of the ‘L’-shaped site as flat throughout, with dual access from the N72 along the north and east boundaries, while a stone wall naturally divides the site in two. According to the agents, they expect a good level of interest, not just from developers but from a wider range, and predict “a destination garden centre will prove very popular amongst the Cork community.” The Irish Examiner, 20^th January

Clonmel, Co Tipperary In what was one of the last planning approvals of 2021, An Bord Pleanála has given the green light to the proposed SHD on lands at Coleville Road, Clonmel in Co Tipperary. The scheme consists of 115 residential units made up of 68 houses, 24 duplexes and 23 apartments. The scheme has been designed by Douglas Wallace Consultants, in consultation with Tipperary and Waterford County Councils. Located within minutes of Clonmel town centre, the scheme has been designed to support a diverse and sustainable community of families and individuals. With a reported deficit of housing stock in the area, news of this permission for the scheme being developed by Torca Developments, is welcome and timely news for the region. The Business Post, 23^rd January

Heuston South Quarter, Dublin 8 Dublin City Council (DCC) planners have recommended that five storeys be removed from a planned 18-storey 399-unit BTR scheme overlooking the Royal Hospital Kilmainham. The council also recommended that two other apartments blocks – both five storeys in height – also be reduced. The scheme is made up of 250 one-bedroom units, 46 studios and 103 two-bedroom units. The planners made their recommendations after council members argued that the height of the scheme by HPREF HSQ Investments Ltd was “excessive, unsuitable and unsustainable and not what the city needs”. The report also recorded that “dissatisfaction was expressed that this is yet another BTR model, which was stated to be a blight on the provision of homes in the city with an exorbitant rental cost which is unsustainable”. The OPW has also told An Bord Pleanála that the scheme “would have a significant detrimental impact on the architectural and historical setting of the Royal Hospital building”. An Taisce and the Heritage Council are also opposed to the scheme. A decision is due on the application next month. The Irish Times, 21^st January

OTHER

Leverage Cap, Central Bank of Ireland Proposed limits on the amount of debt Irish-regulated property investment funds can hold will threaten the viability of residential development and slow the delivery of new projects, according to industry sources. The rules, which were outlined by the Central Bank in November, would cap leverage at 50% of a fund’s value – well below the average level for those that invest in large multifamily housing developments. Funds that invest in Irish retail and commercial property typically have gearing of c. 40% and will not be affected by the changes. But those involved in the residential sector borrow 70% of their funds on average. Without the availability of high borrowing levels, funds are likely to “diversify capital geographically”. As a result, the Central Bank’s rules could result in lower supply over the three years of their implementation until the market rebalances. Alternatively, funds may also choose to move to domiciles with lighter regulation, thereby avoiding the leverage rules entirely. The Irish Independent, 19^th January

Cornmarket St, Cork A building declared derelict c. 20 years ago and an adjoining vacant lot in Cork’s historic city market area are to be offered for sale on the open market. The city council plans to offer for sale the three sites on Cornmarket St, home of the Coal Quay market, as a package as part of its wider moves to address city centre dereliction. The sale will include the vacant former Paintwell building, which has been on the city’s derelict sites register since September 2003. It will also include the adjoining vacant lot, bounded to the south by Portney’s Lane, which has been used for parking, and in recent years as a community garden and as an outdoor space by nearby pubs. In an email to city councillors, the council’s property department said following the review, these properties have been deemed “surplus to requirements”. The sites have also been deemed “not suitable for the provision of social housing”. Any formal move to then dispose of the properties can only be approved by city councillors once a report, outlining the offers which may be made, is prepared for them for discussion and vote. There are a number of other high-profile derelict sites in and around the Coal Quay. The Irish Examiner, 21^st January

Construction Activity, Ireland Construction in 2021 was, broadly, stable, in line with 2020, with variations across the output sectors due to Covid-19 and other impacts. With no restrictions in place, the value of construction output is expected to grow by 18.5% this year, from €27bn to €32bn. This is just €6bn short of levels recorded at the unsustainable height of the Celtic Tiger. However, when inflation is accounted for, the volume of output remains significantly behind what it was 15 years ago, evidenced by employment figures and annual housing completions. When it comes to housing, AECOM believes the sector, driven by strong public expenditure, is on track to significantly increase completions this year and should exceed the Government’s ‘Housing For All’ target of 24,000 units, coming off the back of 32,000 commencements in 2021. Cost and tender-price increases in 2021 saw many residential projects come close to the viability tipping point. The supply of labour is also going to continue to challenge the sector this year. The Irish Examiner, 20^th January

If you have an article which you would like to have considered for inclusion in our next weekly report, please contact us at info@origincapital.ie

Origin Capital funds senior debt transactions in the CRE investment sector, typically in excess of €3m, and has lent over €200m to clients since April 2015.

18th January (Issue 330)

1st February (Issue 332)